ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT effective as of the close of business on the
29th day of September, 2000 (the "Agreement") by and between CREATIVE MARKETING
STRATEGIES, INC., a New Jersey corporation, with an address at 00 X. Xxxxxx
Xxxxxx Xxxxxxxx, Xxx Xxxxxx 00000 ("Buyer"), and NCO TELESERVICES, INC., a
Pennsylvania corporation, with an address at 000 Xxxxxxxxxxxx Xxxxxx, Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx, 00000 ("Seller"). For purposes of this Agreement, the
term "Effective Date" shall mean September 29, 2000.
WITNESSETH:
WHEREAS, Seller is a company located in Fort Washington, Pennsylvania
which, among other things, is engaged in the telemarketing business; and
WHEREAS, Buyer has agreed to purchase, and Seller is willing to sell,
substantially all of the assets, properties and undertakings of the
Telemarketing Division ("TM") of Seller or which are used in or relate to
Seller's operation of its TM telemarketing business (the "Business"), on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective representations,
warranties and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller, each intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement and unless otherwise
expressly indicated, the following terms shall have the indicated meanings:
"Acquired Assets" - as defined in Section 2.1 hereof.
"Action" - any claim, action, suit arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"Active Employees" - as defined in Section 7. 1.
"Affiliate" - with respect to any Person, means any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person (including without limitation its respective
officers, directors and employees); provided that in no event shall Buyer or the
Business be treated as an Affiliate of Seller, nor shall any person directly or
indirectly controlled by Buyer or the Business (including, without limitation,
its officers, directors and employees) as a result of such person's relationship
with Buyer or the Business be treated as an Affiliate of Seller. For this
purpose, "control" means the power to direct the management and policies of a
person through the ownership of securities, by contract or otherwise and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Assigned Contracts" - as defined in Section 2.1 hereof.
"Buyer Transaction Documents" - as defined in Section 6.2
hereof.
"Closing" - as defined in Section 5.1 hereof.
"Closing Balance Sheet" - as defined in Section 3.1 hereof.
"Closing Date" - the date on which the Closing is completed.
"Copyrights" - copyrights and works of authorship in any
media, including Software and related items, Internet site content, catalogs,
charts, diagrams, descriptive texts, advertising and promotional materials and
literature, manuals and reports and other related documentation, drawings and
models, and the materials or media embodying the foregoing.
"Code" - the Internal Revenue Code of 1986, as amended.
"Earnout" - as defined in Section 4.3 hereof.
"Encumbrance" - any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, or restriction of any kind including, without
limitation, any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.
"ERIS" - the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Plan" - an employee benefit plan (other than a
Multi-Employer Plan as defined in 4001(a)(3) of ERISA) which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code or Section 302 of ERISA and is maintained or contributed to by
Seller or any corporation or trade or business that is a member of any group of
organizations described in Section 414(b), (c), (m) or (o) of the Code of which
Seller is a member, or with respect to which Seller could incur liability.
"GAAP" - United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
"Governmental Authority" - any United States federal, state
or local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, judicial or arbitral
body.
"Governmental Order" - any order, rules, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Income Statements" - as defined in Section 6.1 hereof.
"Intellectual Property" - all Patents, Trademarks, service
marks, trade names, mask works, Copyrights, trade secrets, know-how, technology
and other intellectual property and proprietary rights necessary for the conduct
of the Business.
"IP License" - as defined in Section 6.1 hereof.
"ISRA" - as defined in Section 11.1 hereof.
"Law" - any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order or other requirement or rule of law.
"Liabilities" - any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including, without limitation, those
arising under any Law, Action or Governmental Order and those arising under any
contract, agreement, arrangement, commitment or undertaking.
"Material Adverse Change" - any change in, or effect on, the
Business that, individually or in the aggregate is, or could reasonably be
expected to be, materially adverse to the business, assets, liabilities,
prospects, properties, employee relations, management, customer relations,
operations, or financial condition of the Business.
"Most Recent Balance Sheet" - as defined in Section 6. 1.
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"Note" - as defined in Section 4.1 hereof.
"Patents" - inventions, discoveries, processes, designs,
industrial designs, techniques, processes, specifications, drawings, sketches,
tools, tooling devices, prototypes, molds, fixtures, developments, technology,
and related improvements and know-how, whether or not patented or patentable.
"Permits" - as defined in Section 6.1 hereof.
"Person" - any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended.
"Purchase Price" - as defined in Section 4.1 hereof.
"Receivables" - any and all accounts receivable, notes and
other amounts receivable by the Business from third parties, including, without
limitation, customers, arising from the conduct of the Business or otherwise
before the Closing Date, whether or not in the ordinary course, together with
all unpaid financing charges accrued thereon.
"Seller Transactions Documents" - as defined in Section 6.1
hereof.
"Software" - all computer software, databases, systems and
other computer programs owned by, held by, and/or used in the conduct of, the
Business.
"Tangible Net Worth" - as to the Business, at a particular
date, means the sum of all amounts which would, in conformity with GAAP,
consistently applied, be included under shareholders' equity on a combined
balance sheet of the Business at such date; provided, however, such amounts are
to be net of amounts carried on the books of the Business for any of the
following: (a) any write-up in the book value of any assets of the Business
resulting from a revaluation thereof subsequent to the date of their
acquisition, (b) treasury stock, (c) prepaid expenses, (d) unamortized debt
discount and expense, and (e) patents, patent applications, copyrights,
trademarks, trade names, goodwill (including any excess of cost over net assets
of businesses acquired), customer lists, experimental or organization expenses,
unamortized software costs and other like intangibles, and any other item which
should be treated as an intangible in accordance with GAAP consistently applied.
"Trademarks" - all trademarks, service marks, trade names,
brand names, corporate names, logos and trade dress and all elements thereof,
the goodwill of any business symbolized thereby, and all common-law rights
relating thereto.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchase and Sale of Assets. In reliance on the
representations, warranties and covenants contained herein and subject to the
terms and conditions hereof, at the Closing, Seller shall sell, convey and
transfer to Buyer, and Buyer shall purchase, substantially all of the assets and
properties of the Business or which are used in or relate to Seller's operation
of the Business (collectively, the "Acquired Assets"). The Acquired Assets shall
include, without limitation, the following:
(a) All of the client lists, client files, equipment listed on
Schedule 2.1(a) attached hereto or located at the premises listed on Schedule
2.1(a) attached hereto, accounts receivable, and written or unwritten
processes and procedures used by Seller in, or developed by Seller for, the
operation of the Business;
(b) All of the intangible assets used in connection with the
operation of the Business, including without limitation all goodwill and
Intellectual Property;
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(c) All licenses, certifications and other accreditations held
by the Seller that are relevant to, or necessary for, the conduct of any portion
of the Business;
(d) All purchase orders, customer agreements and customer
contracts, including without limitation those contracts and purchase orders
listed on Schedule 2.1(d) attached hereto (the "Assigned Contracts");
(e) All Software and all licenses pertaining to such Software;
and
(f) All fixed assets, furniture, fixtures, inventory,
supplies, books and records used in or related to the operation of the Business.
ARTICLE III
ASSUMPTION OF LIABILITIES
Section 3.1 Assumption of Liabilities. Other than (a) post-Closing
obligations arising under those real estate leases listed on Schedule 3.1(a)
attached hereto, and (b) those liabilities shown on the balance sheet of the
Business dated as of the close of business on the Effective Date delivered to
Buyer by Seller at the Closing (the "Closing Balance Sheet"), Buyer shall not
and does not agree to assume or otherwise be responsible for any liabilities,
debts or other obligations of Seller, or its subsidiaries or related entities,
or the Business. All obligations assumed by Buyer pursuant to this Section 3.1,
if any, shall be freely assignable or, if otherwise required, all third party
consents to such assignment shall be delivered to Buyer by Seller at Closing.
Seller shall pay all expenses of the Business incurred in the ordinary course
through the Closing Date.
ARTICLE IV
PURCHASE PRICE
Section 4.1 Purchase Price. The purchase price for the Assets (the
"Purchase Price") shall be Six Million Dollars ($6,000,000), payable pursuant
to a non-negotiable, unsecured, subordinated promissory note substantially in
the form of Exhibit A attached hereto (the "Note") bearing interest at the rate
of nine percent (9%) per annum delivered by Buyer to Seller at the Closing.
Section 4.2 Allocation of Purchase Price.
(a) The Purchase Price shall be allocated as follows:
Accounts Receivable $2,750,000.00
Equipment $1,500,000.00
Goodwill and Covenant
Not to Compete $1,750,000.00
Any amounts paid by Buyer to Seller pursuant to Section 4.3 hereof shall
increase, on a dollar-for-dollar basis, the amount of the Purchase Price
allocated to "Goodwill and Covenant Not to Compete" as set forth above. If an
adjustment to the Purchase Price is required to be made pursuant to Section 4.4
hereof, or any liabilities are assumed by Buyer pursuant to Section 3.1 hereof,
the parties shall mutually agree upon the corresponding adjustment(s) required
to be made to the allocation of the Purchase Price set forth in this Section
4.2(a), and, if the parties cannot so agree within 60 days of the date of the
adjustment to the Purchase Price or the Closing, as applicable, the parties
agree to submit the dispute to a nationally recognized accounting firm agreed
upon by the parties, whose determination of the adjustment(s) required to be
made to the allocation of the Purchase Price shall be conclusive and binding
upon the parties.
(b) Seller and Buyer agree that each will report the federal,
state and local income tax consequences of the sale contemplated hereunder in a
manner consistent with such allocation and will reflect such allocation on IRS
Form 8594.
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Section 4.3 Earnout. Buyer will pay to Seller, for each of calendar
years 2000, 2001, 2002, 2003 and 2004, an amount (the "Earnout") equal to two
percent (2%) of Buyer's calendar year aggregate gross sales in excess of
Twenty-three Million Dollars ($23,000,000) for each such year. The maximum
aggregate Earnout payments required to be made by Buyer to Seller for such five
(5) calendar years shall not exceed Two Million Dollars ($2,000,000). The
Earnout owed by Buyer to Seller for any calendar year will be paid in cash by
Buyer to Seller within one hundred twenty (120) days of the close of such
calendar year.
Section 4.4 Adjustment to Purchase Price. (a) The amount of the
Purchase Price to be paid by Buyer is subject to adjustment if the Tangible Net
Worth of the Business as of the Closing Date, as determined by Buyer in
accordance with GAAP, is less than Two Million Dollars ($2,000,000).
(b) Within ninety (90) days after the Closing, Buyer will
determine the Tangible Net Worth of the Business as of the Closing Date, in a
manner consistent with the past practices used by the Business, and provide
Seller with a written copy of its determination. Seller will have 60 days from
the date of delivery of the Tangible Net Worth determination by Buyer to review
the determination and provide Buyer with written notice of any objection Seller
has to the Tangible Net Worth calculation performed by Buyer. If Seller does not
provide Buyer with a written notice of objection within said 60 day period,
Seller shall be deemed to have accepted the Tangible Net Worth calculation made
by Buyer and shall be bound thereby for purposes of this Agreement.
(c) If Seller objects to the Tangible Net Worth calculation
performed by Buyer, Seller and Buyer shall work in good faith with one another
to resolve the dispute. If the dispute cannot be resolved by the parties with 60
days from the date of delivery by Seller of a written notice of objection
hereunder, the parties agree to submit the dispute to a nationally recognized
accounting firm agreed upon by the parties, whose determination of the Tangible
Net Worth of the Business as of the Closing Date shall be conclusive and binding
upon the parties.
(d) The amount, if any, by which the Tangible Net Worth of the
Business on the Closing Date is less than $2,000,000, as calculated herein, is
hereinafter referred to as the "Tangible Net Worth Deficiency." The Purchase
Price shall be decreased, on a dollar-for-dollar basis, by the amount of the
Tangible Net Worth Deficiency, if any. The outstanding principal balance of the
Note shall be reduced by the amount of the Tangible Net Worth Deficiency, if
any.
ARTICLE V
THE CLOSING
Section 5.1 Closing. Closing for the sale and transfer of the Acquired
Assets (the "Closing") shall take place by facsimile transmission on October 26,
2000 (the "Closing Date"). The delivery of all the documents and the performance
of all the acts at the Closing shall be deemed to have occurred or to have been
taken simultaneously.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of Seller. The Seller
represents and warrants to Buyer as of the date hereof and the time of the
Closing as follows:
(a) Organization and Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has the corporate power to own the Acquired
Assets and carry on its business. Seller is qualified to do business and in good
standing under the laws of all states in which it is required to be so
qualified, and has full power and authority to own and operate the Acquired
Assets and carry on the Business.
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(b) Corporate Authority. Seller has full power, authority and
legal right to enter into this Agreement and each other document to be executed
and delivered by Seller pursuant hereto (collectively with this Agreement, the
"Seller Transaction Documents") and to perform all of its respective obligations
pursuant to the Seller Transaction Documents. The execution, delivery and
performance of the Seller Transaction Documents by Seller are within Seller's
corporate powers and have been duly authorized by all necessary corporate action
on the part of Seller. This Agreement has been duly executed and delivered by
Seller and constitutes (and, when executed and delivered, each other Seller
Transaction Document will constitute) a legally valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(c) Consents and Approvals; No Violations. Neither the
execution, delivery or performance of the Seller Transaction Documents by
Seller, nor compliance by Seller with any of the provisions thereof will (i)
conflict with or result in any breach of any provision of the Articles of
Incorporation or By-laws of Seller, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Authority or third party
(other than Mellon Bank and those banks in the Mellon Bank lending group), (iii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Seller is a party or by
which it or any of its properties or assets may be bound, or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Seller or any of its respective properties or assets.
(d) Financial Statements. A copy of the unaudited, management
prepared balance sheet of the Business as of June 30, 2000, together with all
related notes thereto (the "Most Recent Balance Sheet") and statement of income
for the period ending on June 30, 2000 (the "Income Statement") are attached
hereto as Schedule 6.1(d). The Most Recent Balance Sheet and the Income
Statements are true and correct and have been prepared by management in
conformity with GAAP consistently applied and present fairly the financial
position and results of operations and cash flow of the Business for the periods
covered thereby.
(e) Absence of Undisclosed Liabilities. Except as and to the
extent reflected or reserved against in the financial statements referred to in
Section 6.1(d) hereof, there are no Liabilities of any nature related to the
business, properties or assets of the Business, whether known, accrued,
absolute, contingent or otherwise.
(f) No Adverse Change. Since the date of the Most Recent
Balance Sheet, there has been no material adverse change in the liabilities or
financial condition of the Business, nor has there been any conducting of the
Business other than in the ordinary course.
(g) Litigation. There are no Actions pending or, to the best
of Seller's knowledge, threatened by or against the Business or affecting any of
the Acquired Assets. Neither the Business nor any of the Acquired Assets is
subject to any Governmental Order (nor, to the best of Seller's knowledge, are
there any such Governmental Orders threatened to be imposed by any Governmental
Authority). To the best of Seller's knowledge there are no existing violations
of federal, state or local laws or regulations which might individually or in
the aggregate adversely affect the Acquired Assets or operation of the Business
being transferred to Buyer hereunder after the Closing Date.
(h) Title, Encumbrances, Condition of the Acquired Assets.
Seller has, and will convey to Buyer at the Closing, good and marketable title
to all of the Acquired Assets, free and clear of all claims, Encumbrances and
restrictions of any nature whatsoever. Seller has in full force and effect
adequate insurance (of the character usually maintained by corporations engaged
in the same or similar businesses) to provide for the reasonable protection of
the Acquired Assets and the Business, all of which insurances will be available
with respect to pre-Closing occurrences.
(i) [INTENTIONALLY OMITTED]
(j) Assigned Contracts. To the best of Seller's knowledge, no
consent or other action is necessary in order to assign to Buyer any of the
Assigned Contracts. To the best of Seller's knowledge, there is no right of
set-off under any Assigned Contract, each is in full force and effect and there
is no default or event which
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with notice or lapse of time or both would constitute a default under any
Assigned Contract.
(k) Permits, Licenses, Certifications and Authorizations. The
licenses, permits, certifications and authorizations listed on Schedule 6.1(k)
attached hereto constitute all of the permits, licenses, certifications and
other authorizations required for the present use of the Acquired Assets or the
operation of the Business being transferred to Buyer hereunder (collectively,
the "Permits"). Such licenses, permits, certifications, or authorizations have
been obtained by Seller and are in full force and effect.
(l) Pension Plans. Seller is not a party to any multi-employer
retirement plan (other than Seller's 40l(k) plan). Any pension, retirement or
other employee benefit plans maintained by Seller have been maintained in
compliance with the ERISA, and the Code, and the rules and regulations
thereunder, and there are no claims or lawsuits which have been or may be
asserted, instituted or threatened against the Acquired Assets of the Business
by the trustees under such plans.
(m) Taxes. Except as set forth in Schedule 6.1(m) attached
hereto, (i) all federal, state, local and foreign tax information and tax
returns pertaining to the Business or the Acquired Assets required to be filed
before the date hereof have been duly filed, (ii) all taxes, interest,
penalties, assessments and other amounts asserted to be due or payable by any
taxing authority (whether or not shown to be due in such returns) have been paid
in full, (iii) no deficiencies for any taxes with respect to taxes attributable
to the Business or the Acquired Assets have been asserted, (iv) no waivers of
statutes of limitation have been given or requested regarding any taxes
attributable to the Business or the Acquired Assets, (v) the liabilities and/or
prepaid assets for taxes reflected in the Most Recent Balance Sheet are accurate
and the amounts reflected for taxes therein are sufficient for the payment of
all accrued, unpaid or deferred taxes of the Business for all periods ended on
or prior to the Closing Date whether or not disputed, (vi) there are no liens
for taxes on the Acquired Assets, except for taxes not yet due and payable,
(vii) none of the Acquired Assets is tax-exempt-use property within the meaning
of Section 168(h) of the Code, and (viii) none of the Acquired Assets is
property that is or will be treated as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and immediately in effect prior to the enactment of the Tax Return Act
of 1986. Except as set forth in Schedule 6.1(m) attached hereto, no unresolved
issue relating to the Business or the Acquired Assets has been raised in writing
by any Governmental Authority in the course of any audit with respect to taxes
for which Seller would be held liable on behalf of the Business. Except as set
forth in Schedule 6.1(m) attached hereto, the Business is not a party to, the
subject of, or bound by any tax sharing or similar contract.
(n) [INTENTIONALLY OM1TTED.]
(o) Other Agreements. Seller is not a party to or otherwise
bound by any written or oral contract or instrument or other restriction which
individually or in the aggregate could adversely affect the consummation of the
transactions contemplated by this Agreement, the Acquired Assets or the Business
being transferred to Buyer hereunder.
(p) [INTENTIONALLY OM1TTED.]
(q) Intellectual Property.
(i) Schedule 6.1(q) attached hereto sets forth, with
respect to all Intellectual Property, (A) all registrations and applications
related thereto that have been submitted to any Governmental Authority, (B) all
material unregistered Intellectual Property, and (C) each and every license,
sublicense, consent-to-use agreement and other agreement concerning the
Intellectual Property to which Seller and/or an Affiliate is a party
(collectively, the "IP Licenses").
(ii) Except as disclosed on Schedule 6.l(q) attached
hereto: (A) Seller owns or has the right to use all the Intellectual Property;
(B) all of the Intellectual Property is valid, enforceable and unexpired, is
free of Encumbrances, has not been abandoned, does not infringe or otherwise
impair the rights of any third party and is not being infringed or impaired by
any third party; (C) no Governmental Order has been rendered or, to the best
knowledge of Seller, is threatened by any Governmental Authority which would
limit, cancel or question the validity of (or Seller's, or any Affiliate's,
right to own or use) any of the Intellectual Property; (D) no Action is
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pending or, to the best knowledge of Seller, threatened that seeks to limit,
cancel or question the validity of (or Seller's, or any Affiliate's, right to
own or use) any of the Intellectual Property; (E) Seller has taken all
reasonable steps to protect, maintain and safeguard the Intellectual Property,
and has made all filings and executed all agreements necessary or desirable in
connection therewith; (F) no party to an IP License is, or is alleged to be, in
breach or default thereunder; and (G) with regard to any IP License, the
transactions contemplated by this Agreement do not require the consent of any
third party, and will not cause any payments to be due, thereunder.
(r) Compliance with Laws. Seller, its operation of the
Business being transferred to Buyer hereunder, and Seller's use of the Acquired
Assets have complied, and are presently in compliance, with all applicable
statutes, regulations, permits, certifications, licenses and ordinances of all
Governmental Authorities. Seller has not received notice of a violation of any
law, order, regulation, permit, certification, license or ordinance, corrected
or not, relating to Seller's operation of the Business or its use of the
Acquired Assets.
(s) Names. Seller has not utilized any name other than its
proper corporate name in providing a security interest in any of its assets,
both tangible and intangible, including without limitation the Acquired Assets.
(t) Burdensome Agreements. To the best knowledge of Seller,
the Business is not a party to any agreement the performance of which by the
Business in accordance with its terms, could reasonably be expected to cause a
Material Adverse Change.
(u) Disclosure. To the best of Seller's knowledge, all
information which has been provided or which will be provided to Buyer in
connection with this transaction is and will be true and correct as of the
Closing Date in all material respects. No representation or warranty made in
this Agreement or as provided herein contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein not misleading.
Section 6.2 Representations and Warranties of Buyer. The Buyer hereby
represents and warrants to Seller as follows:
(a) Organization and Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey.
(b) Corporate Authority. Buyer has fall power, authority and
legal right to enter into this Agreement and each other document to be executed
and delivered by Buyer pursuant hereto (collectively with this Agreement, the
"Buyer Transaction Documents") and to perform all of its respective obligations
pursuant to the Buyer Transaction Documents. The execution, delivery and
performance of the Buyer Transaction Documents by Buyer are within Buyer's
corporate powers and have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been duly executed and delivered by
Buyer and constitutes (and, when executed and delivered, each other Buyer
Transaction Document will constitute) a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
(c) Consents and Approvals; No Violations. Neither the
execution, delivery or performance of this Agreement by Buyer nor compliance by
Buyer with any of the provisions hereof, will (i) conflict with or result in any
breach of any provision of the Certificate of Incorporation or By-laws of the
Buyer, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Authority, (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Buyer is a party or by which it or any of its
properties or assets may be bound, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Buyer or any of its respective
properties or assets.
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ARTICLE VII
COVENANTS OF SELLER
Section 7.1 Pre-Closing Activities. From and after the date of this
Agreement until the Closing, Seller agrees to do and refrain from doing the
following:
(a) Seller shall not take any action that would prohibit or
materially impair its ability to consummate the transactions contemplated by
this Agreement.
(b) Seller shall operate the Business in the ordinary course
of business and consistent with past practice with no material change in
business operations, staffing (regarding key personnel), or acquisition of
disposition of assets outside of the ordinary course of business other than with
the prior consent of Buyer, which consent shall not be unreasonably withheld.
(c) Seller shall not lease, license or otherwise dispose of,
or mortgage, encumber or pledge any Acquired Asset.
(d) Seller will not interfere with Buyer's efforts to, and
shall provide reasonable assistance to Buyer in connection with Buyer's efforts
to, preserve the Business intact and to keep available to Buyer the opportunity
to retain the services of those employees of Seller that are involved in any
manner with the operation of the Business (the "Active Employees") (provided,
however, Seller shall not be required to increase the compensation of any Active
Employee outside of the ordinary course of business). Similarly, Seller will not
interfere with Buyer's efforts to, and shall provide reasonable assistance to
Buyer in connection with Buyer's efforts to, preserve the goodwill of the
customers of the Business and others having business relations with the
Business.
(e) Except as reasonably required, based upon the written
advice of such parties' legal counsel, to fulfill their fiduciary duties, Seller
and its employees, officers, directors, representatives and agents will not,
either directly or indirectly, solicit or engage in discussions or negotiations
with, or provide any non-public information to, or otherwise cooperate with, any
person or entity which seeks to acquire or expresses an interest in acquiring
all or any substantial part of the Acquired Assets or the Business, or for the
purpose of otherwise effecting a transaction inconsistent with the transactions
contemplated by this Agreement.
(f) Seller will maintain all of the Acquired Assets in good
repair, order and condition, consistent with past practice, and maintain
insurance thereon with respect to the conduct of the Business in amounts and
kinds comparable to that in effect on the date hereof.
(g) Seller shall not enter into any collective bargaining
agreement covering any Active Employee, through negotiations or otherwise, or
make any commitment or incur any liability to any labor organization with
respect to any Active Employee.
(h) Seller shall keep and maintain all Permits in full force
and effect, continue to operate the Business pursuant to such Permits, and take
all steps necessary to meet any conditions or requirements imposed on pending
applications for Permits.
(i) Seller shall not make any material changes in the terms
and conditions of employment of any Active Employee without Buyer's consent
(j) Seller shall not pay, discharge or satisfy any claims,
Liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or satisfaction of
Liabilities or obligations in the ordinary course of business consistent with
past practice in accordance with their terms as in effect on the date hereof, or
transfer any rights of material value, other than in the ordinary course of
business consistent with past practice.
(k) Seller shall not amend, modify, or change any existing
employment agreements, equipment leases, real estate leases, customer or client
agreements, vendor agreements, and/or any other agreements related to the
Business, including, but not limited to, the payment terms thereunder, and
Seller shall not make any changes in the furniture, fixtures, and equipment used
by the TM in the operation of the Business, without the prior written consent of
Buyer.
9
Section 7.2 Compliance with Laws. Seller shall duly comply with all
applicable Laws and Governmental Orders required to be complied with by it to
perform its obligations under this Agreement and consummate the transactions
contemplated hereby.
Section 7.3 Further Assurances. After the Closing, Seller shall, at
Buyer's reasonable request and without further consideration, except for
reimbursement of reasonable out-of-pocket expenses incurred by Seller, execute
such additional instruments of conveyance and transfer and provide to Buyer such
additional documents as Buyer may require more effectively to convey and
transfer the Acquired Assets to Buyer.
Section 7.4 Covenant Not To Compete. (a) For a period of five (5) years
after the Closing Date, neither Seller nor any of its Affiliates shall directly
or indirectly engage, participate, invest or assist, as owner, shareholder,
partner, director, officer, employee, agent or consultant, or in any other
capacity, in the telemarketing business anywhere in the world. The foregoing
shall not prohibit Seller or any of its Affiliates from continuing to provide
customer relations management services as part of its ongoing business
operations.
(b) For a period of two (2) years after the Closing Date,
Seller shall not directly nor indirectly, through an Affiliate or otherwise,
except with the prior written consent of Buyer, solicit for employment any
employee or consultant of the Business who is employed by Buyer following the
Closing and shall not do any act or thing to cause, bring about, or induce any
interference with, disturbance to or interruption of any existing relationship
of the Business with any employee, consultant customer or supplier.
(c) If any provision of this Section 7.4 is held to be
unenforceable because of the scope, duration or area of its applicability, the
court making such determination shall have the power to modify such scope,
duration or area or all of them, and such provision shall then be applicable in
such modified form.
(d) Since a violation of this Section 7.4 will result in
irreparable harm to the Business and Buyer, for which money damages alone would
not adequately compensate, if Seller or an Affiliate of Seller violates any of
the provisions of this Section 7.4, Buyer shall be entitled to an injunction
restraining the commission or continuation of any violation of this Section 7.4
by such Person, or any other appropriate decree of specific performance. Such
remedies shall not be exclusive and shall be in addition to any other remedy
which Buyer may have.
Section 7.5 [INTENTIONALLY OMITTED]
Section 7.6 Notices of Default and Litigation. Seller will give prompt
notice to Buyer of: (i) any notice of, or other communication relating to, any
default or alleged default by the Business subsequent to the date of this
Agreement and prior to the Closing Date under any Assigned Contract, (ii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement, and (iii) any litigation or administrative
proceeding pending or, to the best knowledge of Seller, threatened against the
Business.
Section 7.7 Sales and Transfer Taxes. Buyer shall be responsible and
liable for all sales and transfer taxes including the filings of all necessary
tax returns, if any, that may be due as a result of or arise from the sale and
transfer of the Acquired Assets to Buyer. Buyer hereby indemnifies and shall
hold Seller harmless from any liability or expense in connection with any such
sales or transfer taxes.
Section 7.8 Provision of Information. From and after the Closing Date,
Seller shall, and shall cause its representatives to, provide on a timely basis
such financial and other reporting information relating to the Business for
periods prior to the Closing as may be reasonably requested by Buyer for the
purpose of preparing financial and reporting information required by applicable
law. At the Closing, Seller shall deliver copies of all of the records related
to the operation of the Business to Buyer for storage with Buyer. Buyer shall
provide Seller's representatives access to said records upon reasonable notice
in the event that a retroactive audit is necessary or for any other reasonable
purpose. Seller shall provide Buyer's representatives access to the originals of
said records upon reasonable notice in the event that a retroactive audit is
necessary or for any other reasonable purpose.
Section 7.9 Transfer of Monies Received by Seller after Closing. As of
and from the Closing, Seller shall remit to Buyer all amounts received by Seller
with respect to the Business.
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ARTICLE VIII
COVENANTS OF BUYER
Section 8.1 Pre-Closing Activities. From and after the date of this
Agreement until the Closing, Buyer shall not take any action that would prohibit
or impair its ability to consummate the transactions contemplated by this
Agreement.
Section 8.2 Compliance with Laws. Buyer shall duly comply with all
applicable laws required to be complied with by it to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
Section 8.3 Notices of Default and Litigation. Buyer will give prompt
notice to Seller of: (i) any notice of, or other communication relating to, any
default or alleged default by the Business subsequent to the date of this
Agreement and prior to the Closing Date under any Assigned Contract, (ii) any
notice or other communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement, and (iii) any litigation or administrative
proceeding pending or, to the best knowledge of Buyer, threatened against the
Business.
Section 8.4 Non-Interference. Prior to the Closing Date, Buyer shall
operate the Business in the ordinary course of business, consistent with past
practices, and Buyer shall not take any action that would cause Seller to be in
breach of, or otherwise unable to comply with, any representation, warranty or
covenant of Seller set forth herein.
ARTICLE IX
FURTHER COVENANTS OF THE PARTIES
Section 9.1 Non-Assignable Contracts and Permits. (a) Nothing in this
Agreement shall be construed as an attempt to assign to Buyer any contract,
commitment, or other agreement or Permit license or authorization which is by
law or its terms non-assignable or the assignment of which would constitute a
violation of any statute, rule, regulation, contract, commitment or other
agreement or for which a required consent has not been obtained.
(b) If, as of the Closing, an attempted assignment of any
material contract, commitment or other agreement would be ineffective (due to
the absence of a consent or otherwise) or would affect Seller's rights
thereunder so that Buyer would not in fact receive all such rights, Seller shall
cooperate with Buyer in a mutually acceptable arrangement, at Seller's cost, to
provide for Buyer the benefit (including the economic benefit) of such contract,
commitment, or other agreement (other than legal title). If and so long after
the Closing as such assignment shall not have been made, Seller shall: (i) to
the extent that such action shall not result in violation of such contract,
commitment or other agreement transfer to Buyer all assets and rights, including
all monies, received in respect of such contract and hold such contract,
commitment or other agreement in trust for Buyer, and (ii) to the extent that
the provisions of clause (i) above are not sufficient to transfer all of the
benefits (including the economic benefit) of such contract, commitment or other
agreement (other than legal title), or to the extent that any such contract,
commitment or other agreement has been canceled as a result of the attempted
assignment, first, enter into a subcontract arrangement with Buyer and,
thereafter, to the extent such subcontract arrangement is not sufficient to
confer all of the benefits (or the equivalent thereof, including the economic
benefits) to Buyer, take such actions as are necessary to provide all of the
benefits (or the equivalent thereof, including the economic benefits) of such
contract, commitment or other agreement (other than legal title) to Buyer;
provided, however, in no event shall the benefits (including the economic
benefits) to be provided to Buyer hereunder extend beyond the expiration of such
contract, commitment or other agreement or beyond the date that such contract,
commitment or other agreement could be unilaterally canceled or not renewed by
the other party to such contract, commitment or other agreement; and provided,
further, in determining the benefits (including the economic benefits) to be
provided to Buyer, the reasonable costs incurred by Seller (if any) in actually
performing work under such contract shall be taken into account.
11
Section 9.2 Preservation of Books and Records; Post-Closing Access.
From and after the Closing Date, with respect to all matters, Buyer and Seller
agree that they shall preserve and keep the books and records relating to the
Business and/or the Acquired Assets, as the case may be, (a) for a period of
five (5) years and shall make their books and records and employees available to
each other, as the case may be, as may be reasonably required in connection with
any legal proceedings against or governmental investigations of Seller or Buyer
or government reporting obligation of the parties hereunder or for any other
reasonable business purpose arising from or relating to the Business and/or the
Acquired Assets, during regular business hours and upon the prior written
request thereto by the other party, as the case may be. In the event any of the
parties hereto wishes to destroy any such books or records at any time after two
(2) years from the Closing, such party shall first give ninety (90) days prior
written notice to the other party and the other party shall have the right at
its option and expense, upon prior written notice given to the removing party
within said ninety (90) day period, to take possession of said records within
said ninety (90) day period.
Section 9.3 Risk of Loss. The risk of loss or damage to the Acquired
Assets by fire or otherwise until the Closing is assumed by Seller.
Section 9.4 Use of NCO Name. Following the Closing, Buyer shall have
no right to use the NCO name or trademark except that, for a period of one year
following the Closing, Buyer shall be permitted to use the following designation
in connection with Buyer's name: "formerly NCO's Telemarketing Services
Division."
Section 9.5 Use of New York Office Space. Seller shall permit Buyer to
use Seller's office space located in Cheektowaga, New York at no additional
charge until December 31, 2000.
ARTICLE X
EMPLOYEE MATTERS
Section 10.1 Employees. Buyer may offer employment commencing as of
the Closing Date to any of the Active Employees. Effective as of the Closing,
such Active Employees who accept employment with Buyer shall cease to be
employees of Seller.
Section 10.2 Xxxxx XxXxxx - Employment Agreement. Following the
Closing, Xxxxx XxXxxx'x employment agreement with Seller, dated March 4, 1998,
shall be terminated. Despite such termination, Seller shall continue paying to
Xxxxx XxXxxx his base salary of $156,000 per annum until March 4, 2003, payable
in accordance with Seller's regular payroll policy for salaried employees. In
the alternative, Seller may, at Seller's option, pay the base salary owed to
Xxxxx XxXxxx through March 4, 2003 in a lump sum payment adjusted for the net
present value, which such net present value shall be mutually agreed upon by
Xxxxx XxXxxx and Seller, such agreement not to be unreasonably withheld by
either party.
12
ARTICLE XI
CONDITION PRECEDENT TO BUYER'S OBLIGATIONS
Section 11.1 Conditions Precedent to the Buyer's Obligations. The
obligations of Buyer at the Closing shall be subject to the satisfaction of the
following conditions precedent (each of which may be waived by Buyer at its sole
discretion):
(a) Representations. All representations and warranties of
Seller contained herein shall be true and correct on the Closing Date as if made
on such date, all conditions precedent to Closing set forth herein shall have
been satisfied, and all agreements of Seller contained herein shall have been
complied with.
(b) Conveyance Documents. Buyer shall have received from
Seller such bills of sale, assignments, and other good and sufficient
instruments of conveyance and transfer as are necessary to transfer to Buyer
good and marketable title to the Acquired Assets, free and clear of all
Encumbrances, and Seller shall have taken or caused to be taken all such other
steps as are necessary to give Buyer actual possession and operating control of
the Acquired Assets and the Business.
(c) UCC, Judgment and Tax Lien Searches. Buyer shall have
received from Seller (i) certified copies of Requests for Information or Copies
(Form UCC-11) or equivalent reports from all appropriate offices, listing all
effective financing statements which name Seller (under its present name, any
trade names of Seller and any previous names) as debtor, together with copies of
all such financing statements, none of which shall cover the Acquired Assets or
the Business to be transferred hereunder, (h) such patent, trademark and
copyright searches as deemed necessary by counsel for Buyer which set forth no
Encumbrances or assignments with respect to all or any portion of the
Intellectual Property, and (iii) judgment and Federal and state tax lien
searches from all appropriate offices which set forth no judgments or Federal or
state tax liens of record against Seller.
(d) Certificates, etc. from Seller. Seller shall deliver to
Buyer:
(i) A certificate, dated as of the Closing Date,
signed by an officer of Seller, certifying to the fulfillment of the conditions
set forth in this Article XI.
(ii) Certified copies of the resolutions of the
Board of Directors of Seller approving this Agreement and each of the documents
to be delivered by Seller pursuant hereto, and authorizing Seller to execute and
deliver this Agreement and the other documents to be delivered by Seller
pursuant hereto, and to perform the transactions contemplated herein or therein.
(iii) An incumbency certificate for the officers
signing documents on behalf of Seller pursuant to this Agreement
(iv) A receipt with respect to the portion of the
Purchase Price paid by Buyer at Closing.
(v) A certificate in form and substance reasonably
satisfactory to Buyer, duly executed and acknowledged, certifying that the
Seller is not a foreign person as defined in Treasury Regulation Section
1.1445.2(b)(2)(I) and will not be subject to withholding under Section 1445 of
the Code with respect to the sale of the Business and the Acquired Assets.
(e) No Legal Action. No Action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have been
instituted or threatened before any court or by any governmental body which
presents a substantial risk of the restraint or prohibition of the transactions
contemplated hereby or the obtaining of material damages or other material
relief in connection therewith.
(f) Assigned Contracts. Each of the Assigned Contracts shall
be assigned to Buyer as contemplated hereunder, pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit B attached hereto (the
"Assignment and Assumption Agreement").
13
(e) Consents. Buyer shall have received all necessary third
party approvals and consents, including without limitation any applicable
consents and approvals from any Governmental Authority and Mellon Bank, to the
transactions contemplated by this Agreement and the sale of the Acquired Assets
and the Business to Buyer.
(f) Working Capital. Buyer shall have obtained a working
capital line of credit of at least $500,000.00 on terms and conditions
acceptable to Buyer in its reasonable discretion, subject to Buyer demonstrating
a good faith effort (at least three (3) formal applications) to obtain such a
line of credit prior to being able to terminate this Agreement.
(g) Opinion Letter. Seller shall have delivered to Buyer an
opinion of its in-house counsel, dated the Closing Date, in form and substance
satisfactory to Buyer, to the effect that:
(i) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, and has full power and authority to own and operate the Acquired
Assets and carry on the Business.
(ii) Seller has full power and authority to execute
and deliver the Seller Transaction Documents and to perform all of its
obligations pursuant to the Seller Transaction Documents.
(iii) The execution, delivery and performance of the
Seller Transaction Documents by Seller are within Seller's corporate powers and
have been duly authorized by all necessary corporate action on the part of
Seller.
(iv) The Seller Transaction Documents have been duly
executed and delivered by Seller, and each Seller Transaction Document
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, except as enforceability may be limited by: (A)
limitations relating to bankruptcy, insolvency, receivership, fraudulent
transfer or conveyance, reorganization, moratorium, or other laws now or
hereafter in effect relating to or limiting creditors' rights generally; (B) the
possible invalidity, unenforceability or qualification of certain remedial,
procedural and severability provisions set forth herein; (C) general principles
of equity (whether such enforceability is considered in a proceeding in equity
or at law); and (D) public policy considerations.
(v) The execution, delivery and performance of the
Seller Transaction Documents by Seller, and the consummation of the transactions
contemplated hereby, do not and shall not result in (A) a violation of any
provision of Seller's Articles of Incorporation or By-laws or similar
organizational document, (B) to its knowledge, a default (or event which with
notice or lapse of time or both would constitute as default) under, or the
acceleration of any obligation under, any indenture, trust deed, loan agreement
or other instrument relating to or evidencing indebtedness for monies borrowed
by or credit available to Seller, or (C) a violation of any provision of any
real property lease to which Seller is a party.
(vi) No filing with, consent by or approval of any
Governmental Authority or other third party is necessary for the consummation of
the transactions contemplated by this Agreement which has not been made or
obtained and is in full force and effect.
(vii) To the best of the knowledge of the Seller's
counsel, no license, permit, certification or authorization is required for the
present use of the Acquired Assets or the operation of the Business by Buyer.
(viii) To the best of his knowledge, there is no
suit, claim, Action, proceeding or investigation pending or threatened against
Seller, the Business, any of the Acquired Assets or the transactions
contemplated by this Agreement and neither Seller nor any of the Acquired Assets
is subject to any judgment, order, writ, injunction or decree of any court or
any Governmental Authority.
(h) No Amendments to Agreements. Pending the Closing, Seller
shall not amend, modify or
14
change any existing employment agreements, equipment leases, real estate
leases, customer or client agreements, vendor agreements and/or any other
agreements related to the Business, including, but not limited to, the payment
terms thereunder, and Seller shall not make any changes in the furniture,
fixtures and equipment used in the operation of the Business, without the prior
written consent of Buyer.
(i) No Material Adverse Change. Prior to the Closing, Seller
will cause the Business to be operated in the ordinary course with no material
change in business operations, staffing (regarding key personnel) or acquisition
or disposition of assets outside the ordinary course of business other than
with the prior consent of Buyer, which consent shall not be unreasonably
withheld. There shall not have been any Material Adverse Change since the date
of the Most recent Balance Sheet.
(j) [INTENTIONALLY OMITTED]
(k) ISRA Compliance. Buyer shall have received evidence
satisfactory to it in its sole discretion that (i) the provisions of the New
Jersey Industrial Site Recovery Act ("ISRA") are not applicable to the
transactions contemplated by this Agreement or, (ii) if applicable, evidence of
compliance with the provisions of ISRA in a manner satisfactory to the Buyer in
its sole discretion.
(l) Minimum Tangible Net Worth. Buyer shall have received
evidence satisfactory to it in its reasonable discretion that the Tangible Net
Worth of the Business as shown on the Closing Balance Sheet and determined in
accordance with GAAP is not less than Two Million Dollars ($2,000,000).
ARTICLE XII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
Section 12.1 Conditions Precedent to Seller's Obligations. The
obligations of Seller to be discharged under this Agreement on or prior to the
Closing are subject to satisfaction of the following conditions at or prior to
the Closing (unless expressly waived in writing by Seller, in its discretion, at
or prior to the Closing).
(a) Compliance by Buyer. All of the terms, covenants and
conditions of this Agreement to be complied with and performed by Buyer at or
prior to the Closing shall have been complied with and performed in all material
respects, and the representations and warranties made by Buyer in this Agreement
shall be correct in all material respects at and as of the Closing, with the
same force and effect as though such representations and warranties had been
made at the Closing, except for changes contemplated by this Agreement
(b) Certificates from Buyer. Buyer shall deliver to Seller:
(i) A certificate, dated as of the Closing Date,
signed by an officer of Buyer, certifying to the fulfillment of the conditions
set forth in this Article XII; and
(ii) An incumbency certificate for the officers
signing documents on behalf of Buyer pursuant to this Agreement.
(c) No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have been
instituted or threatened before any court or by any Governmental Authority which
presents a substantial risk of the restraint or prohibition of the transactions
contemplated hereby or the obtaining of material damages or other material
relief in connection therewith.
(d) Instruments of Assumption. Buyer shall have delivered to
Seller an executed Assignment and Assumption Agreement substantially in the form
of Exhibit B and such other instruments, certificates or documents as shall be
reasonably requested by Seller for the assignment and assumption of the Assumed
Liabilities.
(e) Purchase Price. Buyer shall have delivered the Note to
Seller.
(f) Opinion Letter. Buyer shall have delivered to Seller an
opinion of counsel, dated the
15
Closing Date, in form and substance satisfactory to Seller, to the effect that:
(i) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
(ii) Buyer has fall power and authority to execute
and deliver this Agreement and to perform all its obligations pursuant to this
Agreement.
(iii) The execution, delivery and performance of this
Agreement by Buyer are within Buyer's corporate powers and have been duly
authorized by all necessary corporate action on the part of Buyer.
(iv) The execution, delivery and performance of this
Agreement and the other Buyer Transaction Documents by Buyer have been duly
authorized and approved by all requisite corporate action and this Agreement and
the other Buyer Transaction Documents have been duly executed and delivered by
Buyer and each constitutes the valid and binding obligation of Buyer enforceable
in accordance with its terms, except as enforceability may be limited by: (A)
limitations relating to bankruptcy, insolvency, receivership, fraudulent
transfer or conveyance, reorganization, moratorium, or other laws now or
hereafter in effect relating to or limiting creditors' rights generally; (B) the
possible invalidity, enforceability or qualification of certain remedial,
procedural and severability provisions set forth herein; (C) general principles
of equity (whether such enforceability is considered in a proceeding in equity
or at law); and (D) public policy considerations.
(v) The execution, delivery and performance of this
Agreement by Buyer, and the consummation of the transactions contemplated
hereby, do not and shall not result in a violation of any provision of Buyer's
Certificate of Incorporation or By-laws or similar organizational document.
ARTICLE XIII
FURTHER AGREEMENTS
Section 13.1 Further Agreements.
(a) Further Assurances. Seller and Buyer each agrees that it
will, upon the request of the other at any time after the date of the Closing
and without further consideration, execute and deliver such other documents and
instruments and take such other action as may be reasonably necessary to carry
out the purpose and intent of this Agreement.
(b) Waiver of Bulk Sale. The Buyer and the Seller each hereby
waive compliance with any applicable bulk sales Law.
(c) Transition. Seller agrees to take any reasonable action
requested by Buyer in order to promote the smooth transition of the Business to
Buyer, including without limitation the transfer to Buyer of the know-how
associated therewith.
(d) Employees. Buyer has no obligation to employ any of
Seller's employees. Buyer assumes no obligation for any employee benefit or
welfare plans or other benefits Seller provides to its employees. Seller retains
all liabilities or responsibilities arising from or connected with any
employment agreements entered into by Seller prior to the Closing Date or any
employee benefit or welfare plans or any other benefits program provided by
Seller to its employees (including without limitation liability for all accrued
sick, personal and vacation time through the Closing Date). Buyer agrees to
inform Seller, as soon as any decision has been made by Buyer, as to those
employees of Seller that Buyer will not be employing after the Closing.
16
ARTICLE XIV
NON-DISCLOSURE OF INFORMATION
Section 14.1 Non-Disclosure of Information. Seller agrees that it shall
not, at any time after the date hereof, use or disclose to any other person or
entity any information pertaining to the Acquired Assets or the Business or the
affairs of Buyer except as required by any applicable legal authority. In
addition, Seller and Buyer agree that no press release or other public
disclosure with respect to the transactions contemplated by this letter
(including, without limitation, financial statement disclosure) shall be made
without their mutual prior written agreement (which shall not be unreasonably
withheld of delayed), except as may be required by law.
ARTICLE XV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
Section 15.1 (a) Survival of Representations and Warranties. The
representations and warranties made by Seller including, without limitation,
statements contained in any certificate or Schedule delivered by Seller to Buyer
pursuant to this Agreement shall survive the Closing for a period of one year
and be fully enforceable at law or in equity against Seller, its successors and
assigns, by Buyer and its successors and assigns. The representations and
warranties made by Buyer, including, without limitation, statements contained in
any certificate delivered by Buyer to Seller pursuant to this Agreement, shall
survive the Closing for a period of one year, and shall be fully enforceable at
law or in equity against Buyer and its successors and assigns, by Seller and its
respective successors and assigns.
(b) Survival of Covenants. The covenants made by Seller and/or
Buyer, except as they may be fully performed and discharged prior to or
contemporaneously with the Closing, shall survive the Closing, and shall be
fully enforceable at law or in equity against Buyer or Seller, as the case may
be, and their respective successors and assigns, until fully performed and
discharged.
Section 15.2 Indemnification of Buyer. Seller shall indemnify and hold
Buyer, its Affiliates, their directors, officers, employees and agents, and
their respective successors and assigns, harmless from any loss, liability,
claim, damage, cost or expense (including without limitation reasonable
attorneys' fees and costs of suit) (a) arising out of or related to the any
Liabilities of Seller or the Business (other than the Assumed Liabilities), (b)
resulting from the breach by Seller of any representation or warranty set forth
in this Agreement or the documents delivered hereunder, (c) resulting from any
misrepresentation or alleged misrepresentations by Seller, (d) resulting from
any breach by Seller of any covenant set forth in this Agreement or the
documents delivered hereunder, or (e) arising out of or related to the use or
ownership of the Acquired Assets, or the operation of the Business, prior to the
Closing; and
Section 15.3 Notice to Seller. In the event that Buyer becomes aware of
facts or events giving rise to obligations of Seller to indemnify Buyer or any
of its Affiliates or their directors, officers, employees and agents under
Section 15.2, Buyer shall notify Seller of such fact or event in writing,
setting forth specifically the obligation with respect to which the claim is
made, the facts giving rise to and the alleged basis for such claim and, if
known or reasonably ascertainable, the amount of the liability asserted or which
may be asserted by reason thereof. Such notice shall be given within reasonable
time of the discovery by Buyer or any of its Affiliates of facts which
constitute the basis for a claim against Buyer or any of its Affiliates which
may give rise to a right of indemnity or promptly following receipt of notice of
the assertion of a claim against Buyer or any of its Affiliates which may give
rise to a right of indemnity, whichever shall occur first; provided that failure
to so notify Seller of any such claim shall discharge Seller of its liabilities
and obligations hereunder only if and to the extent that Seller is materially
prejudiced thereby. In the event of the assertion of a claim against Buyer or
any of its Affiliates which may give rise to a right of indemnity, Buyer shall
allow Seller to, and Seller shall, at its expense, defend against, compromise or
settle such claim with counsel of Seller's selection subject, in any case, to
Buyer's approval, not to be unreasonably withheld or delayed.
Section 15.4 Indemnification of Seller. Buyer shall indemnify and hold
harmless Seller, its Affiliates, their directors, officers, employees and
agents, and their respective successors and assigns, from any loss, liability,
claim, damage, cost or expense (including without limitation reasonable
attorneys' fees and costs of suit) (a) resulting from the breach by Buyer of any
representation or warranty set forth in this Agreement, (b) resulting from any
misrepresentation or alleged misrepresentations by Buyer, (c) resulting from any
breach by Buyer of any covenant set forth in this Agreement, or (d) arising out
of or related to the use or ownership of the Acquired Assets,
17
or the operation of the Business, following the Closing.
Section 15.5 Notice to Buyer. In the event that Seller becomes aware of
facts or events giving rise to obligations of Buyer to indemnify Seller under
Section 15.4, Seller shall notify Buyer of such fact or event in writing,
setting forth specifically the obligation with respect to which the claim is
made, the facts giving rise to and the alleged basis for such claim and, if
known or reasonably ascertainable, the amount of the liability asserted or which
may be asserted by reason thereof. Such notice shall be given within reasonable
time of the discovery by Seller of facts which constitute the basis for a claim
against Seller which may give rise to a right of indemnity or promptly following
receipt of notice of the assertion of a claim against such Seller which may give
rise to a right of indemnity, whichever shall occur first; provided that failure
to so notify Buyer of any such claim shall discharge the Buyer of its
liabilities and obligations hereunder only if and to the extent that Buyer is
materially prejudiced thereby. In the event of the assertion of a claim against
Seller which may give rise to a right of indemnity, Seller shall allow Buyer to,
and Buyer shall, at its expense, defend against, compromise or settle such claim
with counsel of Buyer's selection. As a condition of Buyer's obligation under
Section 15.4, Seller, at its own expense, shall provide such documents, records
and other evidence in its possession, and access to such employees, as Buyer may
reasonably request, shall cooperate with Buyer in defending such claim, and
shall take no other action with regard to any indemnified claim or any
investigation, proceeding or action relating thereto, which is in derogation of
Buyer's right of control or which has not been specifically requested or
approved in advance by Buyer.
Section 15.6 Resolution of Conflicts. In the event a party disputes its
obligation to indemnify the other party under this Section 15 the disputing
party shall have thirty (30) days after receipt of notice under Section 15.3 or
Section 15.5, as applicable, to give written notice of such objection, and the
grounds therefor, and the other party shall thereafter have thirty (30) days to
respond in writing to the objection of the disputing party. If after such thirty
(30) day period there remains a dispute as to any obligation the parties shall
attempt in good faith for thirty (30) days to agree upon the rights of the
respective parties with respect to such indemnification obligation. If no such
agreement can be reached, either party may pursue its rights and remedies.
ARTICLE XVI
MISCELLANEOUS
Section 16.1 Notices. All notices and other communications hereunder
shall be made by overnight courier service, telefax with confirmed receipt or by
United States Certified Mail, Return Receipt Requested, to the following
addresses:
If to Buyer:
Creative Marketing Strategies, Inc.
00 X.Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx XxXxxx, President
With a copy to:
Xxxxxxx X. Xxxx, Esq.
Xxxxxx & Xxxxxxx
A Professional Corporation
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Seller:
NCO TELESERVICES, INC.
000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx, 00000
Attention: Xxxxxxx X. Xxxxxxx, Chairman and CEO
18
With a copy to:
Xxxxxx Xxxxxx, Esquire
NCO TELESERVICES, INC.
000 Xxxxxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxxxxxxx, 00000
Any notice or other communication transmitted in accordance with this Section
16.1 shall for all purposes of this Agreement be treated as given or effective,
if personally delivered, upon receipt or, if sent by courier, upon the earlier
of receipt or the end of the business day following the date of delivery to such
courier, or, if telecopied, upon transmission and confirmation of receipt.
Section 16.2 Miscellaneous Expenses. Each party agrees that it shall
pay its own costs and expense in connection with the transactions contemplated
by this Agreement, including without limitation any legal and accounting fees.
However, in the event of any litigation under this Agreement, the prevailing
party shall be entitled to recover all reasonable legal fees associated with
such litigation and costs of suit from the non-prevailing party.
Section 16.3 Brokers. Each party represents and warranties to the other
that it has not dealt with any third party in such a manner as to cause any such
party to be entitled to any brokers' or finders' commissions in connection with
this transaction.
Section 16.4 Entire Agreement; Amendments. The Schedules and Exhibits
which are attached hereto are incorporated into this Agreement by reference.
This Agreement and the Schedules and Exhibits hereto embody the entire agreement
between the parties and any and all prior oral or written agreements,
representations or warranties, contracts, understandings, correspondence,
conversations, and memoranda, whether written or oral, between Buyer and Seller
or between or among any agents, representatives, parents, subsidiaries,
affiliates, predecessors in interest or successors in interest, with respect to
the subject matter hereof, are merged herein and replaced hereby. If there is
any discrepancy or inconsistency between the terms of this Agreement and any
other agreement executed by or on behalf of Seller to transfer any of the
Acquired Assets or assign any of the Assumed Liabilities, the terms of this
Agreement shall supersede and replace the terms of any such other agreement with
respect to any such discrepancy or inconsistency. Buyer and Seller may only
amend, modify or supplement this Agreement in such manner as may be agreed upon
by both of them in writing signed by an authorized officer of each such party.
Section 16.5 Waivers. Buyer and Seller may only extend the time for, or
waive the performance of, any of the obligations of the other or waive
compliance by the other with any of the covenants or conditions contained in
this Agreement in writing signed by an authorized officer of each such party.
Section 16.6 Governing Law; Venue. The provisions of this Agreement
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to any applicable conflict of laws
provision.
Section 16.7 Invalidity. The invalidity or partial invalidity of any
provision of this Agreement shall affect only such provision or part thereof and
the balance of this Agreement shall remain in effect.
Section 16.8 Headings; Definitions. The Section and other headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement. Wherever in this
Agreement words indicating the plural number appear, such words shall be
considered as words indicating the singular number and vice versa where the
context indicates the propriety of such use.
Section 16.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and part of one and
the same Agreement. Telefaxed signatures shall be deemed originals.
Section 16.10 Assignment; Third-Party Rights. This Agreement shall
inure to the benefit of the parties hereto and their respective permitted
successors and assigns. This Agreement and the rights of Seller
19
hereunder shall not be assignable by Seller without the prior written consent of
Buyer, which consent shall not be unreasonable withheld. This Agreement and the
rights of Buyer hereunder may be assigned by Buyer without the consent of Seller
so long as Buyer guarantees the assignee's performance of all obligations of
Buyer hereunder. Any attempted assignment of this Agreement in breach of this
provision shall be void and of no effect. In the event that any assignment is
validly made, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Nothing in this Agreement, express or implied, shall be deemed to confer upon
any other person, including without limitation employees of the Business, any
rights or remedies under, or by reason of, this Agreement.
Section 16.11 Survival. Notwithstanding any presumption to the
contrary, all representations, warranties, covenants and agreements contained in
this Agreement shall survive the Closing.
IN WITNESS WHEREOF, the parties hereto have set forth their hands and
seals as of the day and year first above written.
CREATIVE MARKETING STRATEGIES, INC.
By: /s/ Xxxxx XxXxxx
----------------------------
Name: Xxxxx XxXxxx
Title: President
NCO TELESERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman & CEO
20
SCHEDULE 2.1(a)
List of Equipment to be Acquired
All equipment owned by the Seller and /or used in the Business and located at
the following premises:
00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
19 - 00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
00 Xxxx Xxxxxx Xxxxxx Xxxxxxxx, Xxx Xxxxxx 00000
0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xx. Xxxxxx, Xxx Xxxxxx 00000
The equipment listed below which is located at the Cheektowaga, New York office
of the Business:
106 Workstations and Chairs
2 Compass Dialers
2 Compass Campaign Manager Computers
70 Computers on the Compass System
6 Office Desks and Chairs
6 Office Computers
All Training Room Tables and Chairs
21
SCHEDULE 2.1(d)
List of Customer Agreements, Contracts and Purchase
Orders (the "Assigned Contracts")
Allstate Motor Club
MBNA Bank
Brand Direct Marketing
International Collectors Society
Teleservices Management Associates (ABA)
4 Hour Sell
Nextel
Xxxxx Fargo
Impact Target Marketing
First Premier Bank
Discover Card
Quick Pages
XX Xxxxx
Winning Connections
Mass Marketing Insurance Group, Inc.
MemberWorks, Inc.
Optima Direct, Inc.
Capad Communications
Capital Direct
Dynamics Marketing
Strategic Media Research
Telestrategies, LTD
4 Hour Wireless
Paradigm Direct
Safirty Distributions
Xerox Business Services
22
SCHEDULE 3.1(a)
List of Real Estate Leases
00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
19 - 00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
00 Xxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000
0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xx. Xxxxxx, Xxx Xxxxxx 00000
23
SCHEDULE 6.1(d)
Balance Sheet and Income Statement
See attached.
24
SCHEDULE 6.1(k)
Permits, Licenses, Certifications and Authorizations
None.
25
SCHEDULE 6.1(m)
Tax Matters
None
26
SCHEDULE 6.1(q)
List of Intellectual Property
Impact S3 Predictive Dialing Software
Impact S3 Scripting and Operating System Software
27
